black bear
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Hi all, I am out Sunday but this might give you something to Chew on 
or Not I don"t care, but its not a pretty picture is it:?:
What should we do, where shall we go:?:
is it over :?:
Credit crunch signals permanent shift in power
By Jeff Randall the Telegraph
Last Updated: 12:01am GMT 14/12/2007
You don't have to talk all night.
I'm a man who can't say no.
You don't have to twist my arm,
Just point me where you want to go
- 'Easy Money' by Billy Joel
In July this year, Time magazine reported "The End of Easy Money". Its conclusion was that the flood of cheap credit that had fuelled a boom in property prices and retail sales was "history".
Interest rates were creeping higher, the house market was cracking, millions of shopaholics had hit maximum on their plastic and banks were becoming twitchy. It was time to shut off the music, turn on the lights and load an embarrassment of empties into the bottle bank.
As any drunk will tell you, however, the longer the boozefest goes on, the harder it is to sober up. Presented with the prospect of drying out, befuddled party-goers invariably demand "one for the road". The horrors of a hangover are beyond contemplation, so they carry on drinking.
Binge borrowers behave the same way. Once hooked on the delights of over-spending, they crave ever bigger measures. Tell them that they need to stop consuming and start saving, and they will scream for another loan. The prospect of sudden austerity sets off delirium tremens.
A responsible publican calls "time" on his customers long before they are falling under tables. Likewise, savvy commercial lenders and central bankers should recognise when clients are about to go over the limit - and stop them. Unfortunately this has not happened. The new millennium knees-up in Britain and America was extended for seven years.
Cash in a flash warps our behaviour. Immediate consumption replaces deferred gratification. Assets become over-valued; risk is under-priced. Gambling masquerades as investment; uncertain rewards are banked.
When the bubble eventually bursts, as it did with the implosion of America's subprime mortgage market, the damage is hard to contain. The gullible are swept away with the greedy. As casualties mount, there is a natural inclination to hunker down and hoard precious resources.
This, in effect, is what caused the financial system to freeze: banks stopped lending to each other. As a result, money market rates delinked from official bank rates and millions of borrowers faced the prospect of being punished with higher interest charges.
Cue: headaches and nausea.
Shocked by the scale of the electorate's discomfort, politicians demanded that something should be done. Few knew or cared how salvation might be achieved. They simply wanted a solution before voters turned ugly. Gentle rate reductions were never going to be enough. So then, what?
On Wednesday came the answer. In response to the credit crunch, caused by a prolonged period of freely available, cut-price debt, British, American, European, Canadian and Swiss central banks knew precisely what needed to be done: offer the market even more; pump liquidity into the system; hose it down with readies. In short, welcome back Easy Money.
The message, it seems, is that if inebriates are shivering and shaking, the best and quickest remedy is the re-introduction of Happy Hour. Pull the pints, mix the cocktails, uncork the vino - all drinks a pound.
The Bank of England is auctioning £10 billion of three-month loans without a minimum interest rate and is prepared to accept as collateral some assets which it had previously deemed unworthy, including mortgage-backed and dollar-denominated securities.
This change of rules is an invitation for commercial banks to load up with cheap hooch. The Bank stopped short of taking luncheon vouchers in return, but if the special offer doesn't work who knows what might be on its next Party Night list. The reaction of financial markets to this concerted action has not been rip-roaring applause. The rate at which banks lend to each other has edged down marginally, igniting a flicker of hope that the system will be ungummed.
But shares in London fell sharply, especially those of the big banks, as investors inferred that if the Old Lady is prepared to tip yet more grog down the necks of drunks in Threadneedle Street, their condition is probably far worse than had been appreciated.
The Wall Street Journal, the Mammonists' manual, opined: "Sooner or later, investors... will rediscover that easy money has its limitations." In this case, it seems to have taken them less than 24 hours to work it out.
One wonders what fast-growth countries in the Middle East and Asia are making of these extraordinary events. They are, I suspect, laughing with satisfaction, as Old World governments and consumers try in vain to kid themselves that they can continue indefinitely to spend more than they earn, while filling the gap with other people's savings.
Napoleon, who knew a bit about hubris, said: "When China wakes it will shake the world." There can be little doubt that eyes are wide open in Beijing, Shanghai and Hong Kong, as well as in neighbouring states, such as Singapore and Malaysia.
In India, too, and the booming Gulf, very few are snoozing. They know that the credit squeeze is not an aberration but a symptom of a permanent shift in financial power to developing states.
While western consumers have been dancing the night away, China has been working round the clock, accumulating a vast stockpile of foreign currency reserves, mainly greenbacks. Asian countries now have enough dollar assets to buy a controlling interest in every company in the Dow Jones index.
China alone has more than $1,000 billion in its vaults. In other words, Beijing could fund the UK's entire 2008 budget in cash.
From a standing start 25 years ago, China has 345,000 dollar millionaires and 108 billionaires. Only the US, with 300, has more. It would take a brave man to bet against the Chinese surpassing that total within three years.
Asian Tigers can afford to prowl the world in search of industrial and financial prey. So, too, Middle East oil producers, who recognise that they squandered their riches from the energy boom of the 1970s and are determined not to make the same mistake again. Their game plan appears simple: buy blue-chip assets, be patient, collect rewards.
Sovereign wealth funds from the Far East and the Gulf now own an impressive portfolio of stakes in flagship businesses in America, Britain, Japan, Switzerland and elsewhere. In recent weeks, Abu Dhabi bought into Citigroup, China into Barclays, Dubai into Sony, and Singapore into UBS, the Swiss bank. This is the new reality of globalisation.
The intoxicating after-effects of Easy Money will, doubtless, keep British shoppers dizzy for a while longer. But when the final demand arrives, as it always does, there will be a difference. The lender to which payment must be made will be headquartered in Bombay or Shanghai or Qatar, not London.
or Not I don"t care, but its not a pretty picture is it:?: What should we do, where shall we go:?:
is it over :?:
Credit crunch signals permanent shift in power
By Jeff Randall the Telegraph
Last Updated: 12:01am GMT 14/12/2007
You don't have to talk all night.
I'm a man who can't say no.
You don't have to twist my arm,
Just point me where you want to go
- 'Easy Money' by Billy Joel
In July this year, Time magazine reported "The End of Easy Money". Its conclusion was that the flood of cheap credit that had fuelled a boom in property prices and retail sales was "history".
Interest rates were creeping higher, the house market was cracking, millions of shopaholics had hit maximum on their plastic and banks were becoming twitchy. It was time to shut off the music, turn on the lights and load an embarrassment of empties into the bottle bank.
As any drunk will tell you, however, the longer the boozefest goes on, the harder it is to sober up. Presented with the prospect of drying out, befuddled party-goers invariably demand "one for the road". The horrors of a hangover are beyond contemplation, so they carry on drinking.
Binge borrowers behave the same way. Once hooked on the delights of over-spending, they crave ever bigger measures. Tell them that they need to stop consuming and start saving, and they will scream for another loan. The prospect of sudden austerity sets off delirium tremens.
A responsible publican calls "time" on his customers long before they are falling under tables. Likewise, savvy commercial lenders and central bankers should recognise when clients are about to go over the limit - and stop them. Unfortunately this has not happened. The new millennium knees-up in Britain and America was extended for seven years.
Cash in a flash warps our behaviour. Immediate consumption replaces deferred gratification. Assets become over-valued; risk is under-priced. Gambling masquerades as investment; uncertain rewards are banked.
When the bubble eventually bursts, as it did with the implosion of America's subprime mortgage market, the damage is hard to contain. The gullible are swept away with the greedy. As casualties mount, there is a natural inclination to hunker down and hoard precious resources.
This, in effect, is what caused the financial system to freeze: banks stopped lending to each other. As a result, money market rates delinked from official bank rates and millions of borrowers faced the prospect of being punished with higher interest charges.
Cue: headaches and nausea.
Shocked by the scale of the electorate's discomfort, politicians demanded that something should be done. Few knew or cared how salvation might be achieved. They simply wanted a solution before voters turned ugly. Gentle rate reductions were never going to be enough. So then, what?
On Wednesday came the answer. In response to the credit crunch, caused by a prolonged period of freely available, cut-price debt, British, American, European, Canadian and Swiss central banks knew precisely what needed to be done: offer the market even more; pump liquidity into the system; hose it down with readies. In short, welcome back Easy Money.
The message, it seems, is that if inebriates are shivering and shaking, the best and quickest remedy is the re-introduction of Happy Hour. Pull the pints, mix the cocktails, uncork the vino - all drinks a pound.
The Bank of England is auctioning £10 billion of three-month loans without a minimum interest rate and is prepared to accept as collateral some assets which it had previously deemed unworthy, including mortgage-backed and dollar-denominated securities.
This change of rules is an invitation for commercial banks to load up with cheap hooch. The Bank stopped short of taking luncheon vouchers in return, but if the special offer doesn't work who knows what might be on its next Party Night list. The reaction of financial markets to this concerted action has not been rip-roaring applause. The rate at which banks lend to each other has edged down marginally, igniting a flicker of hope that the system will be ungummed.
But shares in London fell sharply, especially those of the big banks, as investors inferred that if the Old Lady is prepared to tip yet more grog down the necks of drunks in Threadneedle Street, their condition is probably far worse than had been appreciated.
The Wall Street Journal, the Mammonists' manual, opined: "Sooner or later, investors... will rediscover that easy money has its limitations." In this case, it seems to have taken them less than 24 hours to work it out.
One wonders what fast-growth countries in the Middle East and Asia are making of these extraordinary events. They are, I suspect, laughing with satisfaction, as Old World governments and consumers try in vain to kid themselves that they can continue indefinitely to spend more than they earn, while filling the gap with other people's savings.
Napoleon, who knew a bit about hubris, said: "When China wakes it will shake the world." There can be little doubt that eyes are wide open in Beijing, Shanghai and Hong Kong, as well as in neighbouring states, such as Singapore and Malaysia.
In India, too, and the booming Gulf, very few are snoozing. They know that the credit squeeze is not an aberration but a symptom of a permanent shift in financial power to developing states.
While western consumers have been dancing the night away, China has been working round the clock, accumulating a vast stockpile of foreign currency reserves, mainly greenbacks. Asian countries now have enough dollar assets to buy a controlling interest in every company in the Dow Jones index.
China alone has more than $1,000 billion in its vaults. In other words, Beijing could fund the UK's entire 2008 budget in cash.
From a standing start 25 years ago, China has 345,000 dollar millionaires and 108 billionaires. Only the US, with 300, has more. It would take a brave man to bet against the Chinese surpassing that total within three years.
Asian Tigers can afford to prowl the world in search of industrial and financial prey. So, too, Middle East oil producers, who recognise that they squandered their riches from the energy boom of the 1970s and are determined not to make the same mistake again. Their game plan appears simple: buy blue-chip assets, be patient, collect rewards.
Sovereign wealth funds from the Far East and the Gulf now own an impressive portfolio of stakes in flagship businesses in America, Britain, Japan, Switzerland and elsewhere. In recent weeks, Abu Dhabi bought into Citigroup, China into Barclays, Dubai into Sony, and Singapore into UBS, the Swiss bank. This is the new reality of globalisation.
The intoxicating after-effects of Easy Money will, doubtless, keep British shoppers dizzy for a while longer. But when the final demand arrives, as it always does, there will be a difference. The lender to which payment must be made will be headquartered in Bombay or Shanghai or Qatar, not London.
